Many shale oil firms hedge 2017 prices on Opec rally

London

INDEPENDENT oil companies are using the post-Opec rally to hedge their price risk for next year, banks and consultants say - a trend that's likely to be viewed with concern from Saudi Arabia to Venezuela.

The clamour to hedge (locking in future cash flows and sale prices) could translate into higher US oil production next year, offsetting an output cut that the Organization of the Petroleum Exporting Countries outlined in Algiers last week. Shale firms in particular would enjoy extra income to pay for additional drilling.